The Clinton Herald, Clinton, Iowa

October 21, 2013

The cost of the trial

By Katie Dahlstrom
Assistant Editor

CLINTON — The city of Clinton’s legal malpractice suit has cost $766,412 so far, which does not include the yet-to-be-determined costs from the 13-day trial.

The city is still responsible for the attorneys’ and expert’s hotels, travel, copies and other expenses incurred as the city tried to prove that Michael Walker and his law firm Hopkins and Huebner committed legal malpractice as they represented the city against a 2009 Federal False Claims Act lawsuit.

The city also will pay for Mayor Mark Vulich’s hotel stay from the first week of the trial.

Chicago law firm Hannafan and Hannafan have been paid $530,781; Davenport firm Gosma, Tarbox and Associates, $138,577; False Claims Act expert Ronald Clark, $84,301; and Herring Reporting Services, $12,753 as of Oct. 15.

According to invoices, Hannafan received their first payment for work on the case against Walker and his firm in March 2011 and Gosma, Tarbox and Associates came in April 2012.

Walker and his firm were retained to represent the city in 2009 after former Clinton firefighter Timothy Schultheis filed a complaint under the federal False Claims Act that the city was knowingly submitting false ambulance claims to Medicare and Medicaid in order to receive higher reimbursement rates.

The False Claims Act case was settled in 2010 for $4.5 million to be paid to Schultheis and the U.S. Department of Justice in annual installments of $450,000 over the course of 10 years. Schultheis and his attorneys receive 30 percent of the settlement.

The city filed the legal malpractice suit against Walker and his firm in March 2012, alleging Walker’s negligence caused the city to rush into the settlement. They sought $4.67 million to recoup the costs of the settlement and attorney and expert fees.

On Friday, a Scott County jury decided Michael Walker and his law firm Hopkins and Huebner were not negligent.

The city was awarded none of the $4.67 million.

”We’re disappointed by their decision,” City Administrator Jessica Kinser said.

Hannafan’s compensation was changed from an hourly rate to a contingency contract in July. If the city had won, Hannafan would have received 25 percent of what the city was awarded. While it is unclear if the city will pursue an appeal, Hannafan will receive 30 percent of whatever is won on appeal.

Regardless of the verdict, the city is locked into the settlement, which is paid for with $450,000 out of the debt service levy every October. The city made the fourth of 10 payments this month, with $2.7 million still owed to Schultheis and the U.S. Department of Justice.

If the city had received any money, it would have gone to pay the settlement earlier than stipulated by the agreement.